Do SMEs need protecting from globalisation?

The Irish economy, despite tentative signs of recovery, is still in a fragile state at the moment. Growth was a modest 0.7% last year, and even this looks difficult to sustain as the country officially fell back into recession in the last two quarters of 2011. The government had hoped for things to be looking much stronger by now, originally predicting growth rates of 1.3%, but the ongoing Eurozone crisis has been having a smothering effect (and, seemingly, is still no closer to resolution than it was a year ago). It was under these conditions that the Irish people voted last week in favour (by 60.3 percent) of the EU fiscal compact, crossing their collective fingers that further austerity isn’t about to stamp on the green shoots of recovery.

We’ve been focusing mostly on the big economic picture at Debating Europe, but it’s also worth considering the impact of the crisis at the local and community level. More than 99% of all European businesses are Small and Medium Enterprises (SMEs), and these have been especially hard hit by the tightening of credit and the weakening economic outlook. Last year, we looked at whether SMEs could be the key to getting Europe’s economy back on track. Now, we’d like to ask whether SMEs need a bit of extra protection before they can kick-start the economy.

Jai, for example, sent in a comment arguing that local economies needed protecting from the ravages of globalisation:

With regards to the full scope and impact of globalization on local economies… the immediate answer would be to focus more on achieving or striving to, a) protect worker’s rights and the communities that they support b) protect the local economies… I think this would still be a great topic for a debate.

We recently had the opportunity to talk to John Perry, Irish Minister for Small Business, to ask him for his views on this question. With the economy struggling, are Irish SMEs really in any position to compete internationally? We started with a comment from Rui, arguing that both SMEs and large enterprises alike need to be protected from “the competition of markets where [the] labour force are treated almost like slaves.” Is Rui right to call for greater protection for SMEs?

I don’t believe so. It’s true that in Ireland, and right across Europe, SMEs are the backbone of the economy. But when it comes to competing with foreign companies, they can compete very well. On the contrary, I think we need to promote the internationalisation of SMEs so they can tap into the potential of developing markets.

Next up, Christos made the point that “one of the greatest casualties of this crisis [has been local shops]. One by one they are closing, giving way to larger supermarket chains and multinational boutiques… Not only do small companies benefit the community feeling, [they also support] the local economy and give you more variety of goods.” Isn’t it worth protecting small businesses to preserve this diversity?

It’s a very good question. It’s important that the high streets in the town centres are diverse. The off-licence, the deli section, the speciality niche; there are things a small store can offer that a larger retailer cannot. It’s also important to get value for money, and to promote economic enterprise within communities. It’s about cutting down costs, and it’s about survival for these smaller businesses. People have got to adapt to the new market place. Our objective is to ensure variety, but we also need to cut down costs and ensure we’re effective.

What do YOU think? Do smaller businesses need protecting from the negative effects of globalisation? If governments don’t intervene to preserve variety in the high-street, will we end up with identical cloned city centres across Europe? Or is globalisation something to be welcomed as an opportunity for SMEs? Should we be encouraging small business-owners to internationalise, and start taking advantage of opportunities in the developing world? Let us know your thoughts and comments, and we’ll take them to policy-makers and experts for their reactions.

The fact that this question is being asked immediately brings in the real question of the decade. Given that the EU supports globalization, what is the point of an EU at all? Given that the concept of the EU was to provide protection from globalisation. We are still paying for this protection yet we were, deliberately in my opinion, exposed to massive global attacks, especially in the financial sectors. The only people that appear to be benefitting are wealthy land owners, either via subsidies and/or price fixing. And of course the beaurocracy. As well as enabling a global military regime. Way past time to get out, in my opinion of course…pj

We need less taxes! In Croatia small businesses have to pay huge taxes. Big business is protected by state, they have tax exemptions, but small business do not! Our business is already internationalized. Croatia is considered “developing” country, but nobody can do any business while administration is still in communist mind set. Huge taxes, no help, actually they try to ruin everybody with endless paperwork. Before you come to us, hoping to internationalize business, you (EU) should finally stop supporting neo-communists in raging liberal clothing. They are cheating you for years, and everybody who is for real step forward, they call “nationalist”!
Every smart man in Croatia is nationalist for them! We need help to get rid of Titos little communist dictators in every slice of life!!!

I wouldn’t make that mistake again too quickly, Sunny, jumping from the tito into the hitler. What is wrong with being a Croatia?. Never forget that you are not the only Croatian in Croatia and there is no me in team..pj

MandyandPj Leneghan, your romantic ideas about communism are coming from NOT EVER LIVING IN IT! So please spear me of that. It is your WRONG idea that Croatian want to jump from Tito to Hitler. We want to jump from not functioning state to functioning one. You have NO idea about problems in Croatia. And they are not connected to raging propaganda about Hitler. That was 70 years ago, almost everybody who had any connection to Hitler, and many that did not, were killed. GOT THAT? It is 21 century and we Croatians are terrorized from communist state of mind, lack of work, organization. We are just tied of financing lazy people with “big” ideas! You want to send them money so they can blab about beauties of criminal communism, go ahead! I do not want to finance them any more!!!!

They ARE :p taking advantage of the developing world – China – however it is not up tothe state to dictate, set the terms. In one way or the other.
The state just removes the risk factor.
Like in business. That’s all that we should have.

the EU, which is meant to become a
federal superstate, is currently a trading block, more of an economic
union. you say paying for protection then we/yet are attacked..what? n bureuacracy thrives everywhere but land..oh cmon, lay off the class ..1917 stye. Russia :p there r no serfs anymore.
But maybe what we r seeing is going bk to it..
n i dont see the mil anywhere ..of course, thus far no Marinus or Sully has emerged

Debating Europe :) I agree, lets talk about small business and how to help as all to survive. Tax percentage that I am paying is 25%. I feel that we need protection from the states and bureaucracy, not from globalisation. On the other hand, we do not have new industries and we do not have anything better and new, to sell to the rest of the world. Where are clean energy projects? Why do not we have cheap electric cars, solar panels, windmills ? Who will finance the first wave of expansion into new energy intelligent products?

They all have a place in our societies and markets. Support the creation and sustainability of our SMEs and sustain jobs and creativity. It is ok to have large multinational chains, but do not allow them to strangle all competition from the SMEs. Perhaps a European fund for SMEs to encourage businessmen and entrepreneurs to stay locally and be allowed to become biger if they want would help…

Just making a point Debating Europe, jumping from the pot into the fire so to speak. Where I disagree with Sunny, who says that we need, the ‘we’ being small business, needs protection from the state and bureaucracy but not from globalization, the reason in my opinion, that the states are doing what they do is because they are at the mercy, of those that control, this kind of globalisation which happens to be owned by big business (globalists). Historically, (recent history) from my observations, we had two negative powers at work, the state monopoly capitalism of the USSR and the private monopoly capitalism of the US. Whilst in Europe (western), generally, we had the best from both, mixed economies, a mixture of capitalism and communism (socialist), ie Social Democracy. Which ensured, after a fashion, that the essential domestic bills were paid, ie economic security, healthcare, education, pensions etc (socialists) before the non-essential bills were paid, incentives, ie super wealth, super mansions, fancy yachts and the like. The state had the role of looking after the domestic bills, the essential services etc and private capital provided the incentives to prosper within this kind of system. As we all know, the state monopoly capitalism of the USSR collapsed and as both negatives were globalists in nature, this left the other negative an unhindered path to push their negative politics onto the rest of the planet, in the way of their *economic set of rules*. What you see around you, are the consequences of this. The common market, now the EU, was, as far as I *perceive*, was set up to protect Europe from such an event. By creating a co-operation (co-op) of trading Social Democratic nations within Europe and for Europe, regardless of what others were doing around the planet. This EU has now fallen to the negative that is the US private globalist monopoly capitalism assisted by their supporters from within Europe. Yes, the American people are a friendly bunch, generally speaking BUT just have a look at their politics, what a basket case. They probably spend more on healthcare than we do but a large number of its citizens are without healthcare BUT the private insurance companies and healthcare providers are all doing extremely well. They also spend more on social security and again many are without income and pensions and AGAIN the private providers are doing pretty well thank you very much. Just a few examples. Now I am one person that is opposed to the US way of doing things (and wouldn’t have wanted to live in the soviet union either). It is that simple, individual citizens AND small businesses need to recognise that. You can continue supporting the private monopoly capitalists and end up like the Philippines or you can stand up for social democracy. Ex soviet bloc nations probably did not and do not appreciate all of this, they appear not to realize that the ‘West’ was NOT all one economic system. Unfortunately, they soon will. You can have the money, but nothing to spend it on (USSR) or you can have plenty to spend it on but no money (US) I prefer the EU model pre the invasion of private monopoly capitalism, individuals and small business thrived under that environment, what do you see around you now? The EU needs to urgently reboot in my opinion..pj

So to continue the topic thread, patch work policies, such as in this case, assistance to small business whilst in retreat will nor work, stop retreating and fight back is the way to go. In fact, nothing has actually gone wrong, what we are witnessing is a normal consequences of the current dominant economic system. So if you support this system stop whining is what I would say :)….pj

Really it is time people at the top of the tree realised what is going on in their own back yard. What is needed is a complete rethink of the total idealism you cling to for solace. Why is the big question.

You allowed Europe to be sabotaged and yet will not address the saboteurs. Why?

The is NOT whether «SMEs need protecting from globalisation» or not. Of course SME owners could always use «protection» from other SMEs.. or any sort of advantage that some may classify as «unfair advantage». Of course they would! The question is, or should be, DOES SOCIETY HAVE AN INTEREST IN PROTECTING SOME SMEs?

Does society, organized in institutions that make what we call «the state» and that represents all of us (or so it sould), have an interest in protecting «our» SMEs against other SMEs? Does «the state», that empersonement of «the polis» regard as advantageous that we protect SMEs fromlarge conglomerates and finantial corporations? Do WE have an interest in protecting some (or all) or OUR companies, those that pay taxes «here», against «multi-national defiscalized banks who only have a countru when they are «in need»?

I think WE DO have an interest; but it is OUR INETEREST. The question is NOT wherer SMEs «need» protection: the question is wheter WE have a rational collective i nterest in protecting «our» taxpaying SMEs as against tax-evading subsidy-seeking «to-big-to-fail» multinationals.